Financial systems

1. UNIT-3
SETTING PRODUCT & DESIGNING AND
MANAGING SERVICES
5-1

2. 5-2

3. 5-3

4. Product?????????
Many people think a product is tangible, but a product is anything that can be offered to a
market to satisfy a want or need, including physical goods, services, experiences, events,
persons, places, properties, organizations, information, and ideas.
5-4

5. 5-5
Product is a key element in the market offering.

6. Product Levels
¬
iii.
i. Core benefit- The fundamental
benefit or services that the
customer is really buying.
The CORE product is NOT the
tangible, physical product. You
can't touch it. That's because the
core product is the BENEFIT of
the product that makes it
valuable to you. So with the car
example………..!
ii. Basic Product- Marketer turns
benefit into basic product.
Expected product- A set of
attributes & conditions buyers
normally expect when they
purchase product according to
their purchasing power.

7. ν Augmented product- Products that exceeds
consumers expectations. Competition usually takes
place in this level, for which you may or may not
pay a premium.
v. Potential product- All possible
augmentations & transformations the product
might undergo in future.

8. Product Classifications
DURABILITY AND TANGIBILITY
Nondurable goods
Durable goods
Services
CONSUMER-GOODS CLASSIFICATION
Convenience goods
Shopping goods
Specialty goods
Unsought goods
INDUSTRIAL-GOODS CLASSIFICATION
Materials and parts
Capital items
Supplies and business services
5-8

9. Product Classification
¬ Products are classified on the bases of durability,
tangibility & use (Consumer or Business).
υ Durability & Tangibility
1. Nondurable- Tangible goods usually consumed in
one or few uses. Purchased quickly & consumed
frequently. FMCG (wide availability, small
markup, heavy advertisements)
2. Durable Goods- Tangibles that normally provide
long-term benefit. Require personal selling &
services, higher profit & seller guaranties.

10. Durable Goods
Provide Long-Term Benefits
(cars, furniture, appliances)
Nondurable Goods
Provide Short-Term Benefits
(newspapers, food)
Low
Involvement
Decisions
High
Involvement
Decisions

11. 3. Services- Intangible, inseparable & activities that are
the main objective of a transaction designed to provide
want- satisfaction to customers.
¬ Virtually all services require supporting goods & goods
require supporting services.
¬ A company may also sell a combination of goods &
services.

12. ⎫ Convenience
•
•
•
Shopping
Specialty
Unsought
♣ Products involving frequent
purchases bought with
¬
¬
¬
minimal buying effort,
without gathering extra
information and little
comparison shopping
Low price
Widespread distribution Mass promotion
by producer
Convenience goods are further divided
Staples- regular bases
Impulse Goods- without planning
Emergency Goods-urgent need.
(Use)
Consumer
Goods
Classification
♣Goods purchased
by final consumer
for personal
consumption

13. ν Emergency Goods
ν Impulse
Goods ν
Sta
ples
ν

14. • Convenience
⎫ Shopping
•
•
Specialty
Unsought
λ Less frequent purchases
requiring more shopping
effort and price, quality,
suitability and style
comparisons in several
stores or between brands.
λ Prices higher than
convenience
goods.
λ Selective distribution in
fewer outlets.
λ Advertising and personal
selling by producer and
reseller.
Consumer
Goods
Classification

15. •
•
Convenience
Shopping
Specialty
• Unsought
λ Products having unique
λ
λ
λ
characteristics or brand identity
for which a significant group of
buyers is willing to make a
special purchase effort
(substantial time, price & in
locating product) .
High price
Selected distribution even with
no convenient locations.
(although they must let
prospects & buyers about
location)
Carefully targeted promotion by
producers and resellers
Consumer
Goods
Classification
Classification

16. •
•
•
Convenience
Shopping
Specialty
⎫ Unsought
• Consumer products
that the consumer
either doesn't know
about or if knows about
even then doesn't
normally think of
buying right now.
•
•
•
Pricing varies
Distribution varies
Aggressive advertising
and personal selling by
producers and resellers
Consumer
Goods
Classification
Products that are usually purchased
due to adversity rather than desire

17. Product
Classifications
•
•
Durability and tangibility
Consumer goods
⎫ Industrial goods
♣ Products bought
by organizations or
individuals for use in
a business.
ν Material & Parts
ν
ν
a. Raw Material- goods that
become the part of product prior
of being processed in anyway.
b. Manufactured material and
parts-
Capital items- long lasting goods
that facilitates developing or
managing the finished product.
♦ Installations- buildings, heavy
equipments
♦ Equipment- portable
equipment &tools
Supplies and business services
♦ Maintenance and repair
♦ Advisory services

18. By-Product
ν A by-product is a secondary or incidental product
deriving from a manufacturing process, a chemical
reaction or a biochemical pathway, and is not the
primary product or service being produced. A by-
product can be useful and marketable, or it can be
considered waste.
¬ Dried blood-from slaughterhouse operations
¬ Feathers - poultry processing

19. New Product Development
• New product development is a task taken by the company to
introduce newer products in the market. Regularly there will arise a
need in the business for new product development.
• The company existing products may be technologically outdated, or
they have different segments to target or they want to cannibalize an
existing product. In such cases, New product development is the
answer for the company.

20. New Product Development
Development of original products, product
improvements, product modifications, and new
Brands through the firm’s own R&D efforts.

22. Milton Smart Electric App Enabled
Tiffin Box
‘Smart Tiffin’ enables
consumers to always consume
home cooked meals in the
safest way with no change in
taste or experience. Just plug-
in, connect the Wi-Fi and let
the app do the rest of the work.

24. There are 7 stages of new product development
and they are as follows.
• 1) Idea generation
• A company has to generate many ideas in order to find one that is
worth pursuing. The Major sources of new product ideas
include internal sources, customers, competitors, distributors and
suppliers.
• Almost 55% of all new product ideas come from internal sources
according to one study. Companies like 3M and Toyota have put in
special incentive programs or their employees to come up with
workable ideas.

25. Idea Generation
• Internal sources refers to the company’s own formal research and
development, management and staff, and entrepreneurial programs.
• External sources refers to sources outside the company such as
customers, competitors, distributors, suppliers, and outside design
firms

26. 2) Idea Screening
• The second step in New product development is Idea screening. The
purpose of idea generation is to create a large pool of ideas.
• The purpose of this stage is to pare these down to those that are
genuinely worth pursuing. Companies have different methods for
doing this from product review committees to formal market
research.
• It, is helpful at this stage to have a checklist that can be used to rate
each idea based on the factors required for successfully launching the
product in the marketplace and their relative importance.

27. Idea Screening
• Identify good ideas and drop poor ideas
• R-W-W Screening Framework:
• Is it real?
• Can we win?
• Is it worth doing?

28. 3) Concept Development and Testing
• A product concept is a detailed version of the idea stated in
meaningful consumer terms.
• Once the concepts are developed, these need to be tested with
consumers either symbolically or physically. For some concept tests,
a word or a picture may be sufficient, however, a physical
presentation will increase the reliability of the concept test.

29. Concept Development and Testing
• Product idea is an idea for a possible product that the company can
see itself offering to the market
• Product concept is a detailed version of the idea stated in meaningful
consumer terms
• Product image is the way consumers perceive an actual or potential
product

30. 4) Marketing Strategy Development
• This is the next step in new product development.
The strategy statement consists of three parts: the first part describes
the target market, the planned product positioning and the sales,
market share and profit goals for the first few years.
• The second part outlines the product’s planned price, distribution,
and marketing budget for the first year. The third part of the
marketing strategy statement describes the planned long-run sales,
profit goals, and the marketing mix strategy.

31. Marketing Strategy Development
• Marketing strategy development refers to the initial marketing
strategy for introducing the product to the market.
• Marketing strategy statement includes:
• Description of the target market
• Value proposition
• Sales and profit goals

32. 5. Business Analysis
• Business Analysis – Once the management has decided on
the marketing strategy, it can evaluate the attractiveness of the
business proposal.
• Business analysis involves the review of projected sales, costs and
profits to find out whether they satisfy a company’s objectives.

33. 6) Product Development
• Here, R&D or engineering develops the product concept into a
physical product. This step calls for a large investment. It will show
whether the product idea can be developed into a full- fledged
workable product.
• First, R&D will develop prototypes that will satisfy and excite
customers and that can be produced quickly and at budgeted costs.

34. • Product development Involves the creation and testing of one or
more physical versions by the R&D or engineering departments.
• Requires an increase in investment.

35. 7) Test Marketing
• f the product passes the functional tests, the next step is test
marketing: the stage at which the product and the marketing
program are introduced to a more realistic market settings.
• Test marketing gives the marketer an opportunity to tweak
the marketing mix before the going into the expense of a product
launch.

36. • Test marketing :is the stage at which the product and marketing
programme introduced into more realistic marketing settings.
Provides the marketer with experience in testing the product and
entire marketing program before full introduction.

37. 8) Commercialization
The final step in new product development is Commercialization.
Introducing the product to the market – it will face high costs for
manufacturing and advertising and promotion.
The company will have to decide on the timing of the launch
(seasonality) and the location (whether regional, national
or international).

38. • Commercialization is the introduction of the new product
• When to launch
• Where to launch
• Planned market rollout

39. Examples?????

41. The Six Categories of New Products
1. New-to-the-world Products (really new Products)
2. New-to-the-firm Products (new Product Lines)
3. Additions to existing Product Lines
4. Improvements and Revisions to existing Products
5. Repositioning
6. Cost Reductions

42. 1. New-to-the-world Products (really
new Products)
The alternative expression for new-to-the-world products (really new
products) already indicates that this is what most people would define as a
new product. These products are inventions that create a whole new market.
New-to-the-world products are products that have never been created or
introduced to the market before.

43. 2. New-to-the-firm Products (new Product Lines)
• Products that take a firm into a category new to it. The products are
not new to the world, but are new to the firm. The new product line
raises the issue of the imitation product: a “me-too”.

44. 3. Additions to existing Product Lines
• These are simple line extensions, designed to flesh out the product
line as offered to the firm’s current markets.

45. 4. Improvements and Revisions to existing
Products
• Current products made better.

46. 5. Repositioning
• Repositioning are products that are retargeted for a new use or
application. Also includes products retargeted to new users or new target
markets. Milkmaid – Positioning & Repositioning
• Milkmaid condensed milk has followed four distinct successful positioning
strategy till date:
• 1.Milkmaid was initially positioned as a “creamer” or “whitener” for tea
and coffee.
• 2.The second position was “the tastiest milk made”. It had relevance at a
time when fresh milk was in short supply in some parts of India.
• 3.Next positioning was Milkmaid as a “topper on fruits and puddings”.
• 4.The fourth positioning was “Milkmaid for desert recipes”.

48. 6. Cost Reductions
• Finally, cost reductions complete the six categories of
new products. Cost reductions refer to new products
that simply replace existing products in the line,
providing the customer similar performance but at a
lower cost. May be more of a “new product” in terms
of design or production than marketing.

49. Why Do New Products Fail?

50. Why Do New Products Fail ?
• Overestimated market
• Poor design
• Incorrect positioning
• Error in pricing
• Poor marketing
communication
• Production-orientation
• Cost overrun
• Competition

51. Why Do New Products Success?
• Unique
• superior product
• Well defined product
concept from startup
• Specific criteria
• Specific strategic role
• Systematic new-product
process

52. Sales and Profits Over
A Product’s Life

53. The Typical Product Life Cycle (PLC) Has
Five Stages
▪ Product Development
▪ Introduction
▪ Growth
▪ Maturity
▪ Decline
▪ Not all products follow this cycle:
❖ Fads
❖ Styles
Product Life-Cycle Strategies

54. Styles, Fashions, and Fads

55. Companies
want their
products to
enjoy a long
life cycle.
Hershey’s
actively
promotes the
fact that it has
been
“unchanged
since 1899”

56. Begins when the
company develops a new-
product idea
Sales are zero
Investment costs are high
Profits are negative
PLC Stages
•Product
development
Product Life-Cycle Strategies

57. Low sales
High cost per
customer acquired
Negative profits
Innovators are
targeted
Little competition
•PLC Stages
Introduction
Product Life-Cycle Strategies

58. Product – Offer a basic product
Price – Use cost-plus basis to set
Place – Build selective
distribution
Advertising – Build awareness among early adopters
and dealers/resellers
Sales Promotion – Heavy expenditures to create trial
Marketing Strategies:
Introduction Stage

59. Product Life-Cycle Strategies
Rapidly rising sales
Average cost per
customer
Rising profits
Early adopters are
targeted
Growing competition
PLC Stages
Growth

60. Product – Offer product extensions, service, warranty
Price – Penetration pricing
Distribution – Build intensive distribution
Advertising – Build awareness and interest in the mass
market
Sales Promotion – Reduce expenditures to take
advantage of consumer demand
Marketing Strategies: Growth
Stage

61. Sales peak
Low cost per
customer
High profits
Middle majority are
targeted
Competition begins
to decline
PLC Stages
Maturity
Product Life-Cycle Strategies

62. Product – Diversify brand and models
Price – Set to match or beat competition
Distribution – Build more intensive
distribution
Advertising – Stress brand differences
and benefits
Sales Promotion – Increase to encourage
brand switching
Marketing Strategies: Maturity
Stage

63. •Declining sales
•Low cost per
customer
•Declining profits
•Laggards are
targeted
•Declining
competition
PLC Stages
Decline
Product Life-Cycle Strategies

64. • Product – Phase out weak items
• Price – Cut price
• Distribution – Use selective distribution: phase out
unprofitable outlets
• Advertising – Reduce to level needed to retain
hard-core loyalists
• Sales Promotion – Reduce to minimal level
Marketing Strategies:
Decline Stage

65. Product Life-Cycle Strategies
Characteristics Introduction Growth Maturity Decline
Sales Low Rapidly rising Peak Declining
Costs High per customer Average per
customer
Low per customer Low per
customer
Profits Negative Rising High Declining
Customers Innovators Early adopters Middle majority Laggards
Competitors Few Growing number Stable number
beginning to
decline
Declining number
Marketing
Objectives
Create product
awareness and trial
Maximize market share Maximize profit
while defending
market share
Reduce expenditures
and milk the brand

66. Product Life-Cycle Strategies
Strategies Introduction Growth Maturity Decline
Product Offer basic product Offer product
extensions, service,
warranty
Diversify brand and
models
Phase out weak items
Price Use cost-plus Price to penetrate
market
Price to match or best
competitors
Cut price
Distribution Build selective Build intensive Build more intensive Go selective, phase out
unprofitable outlets
Advertising Build product awareness
among early adopters
and dealers
Build awareness and
interest in the mass
market
Stress brand
differences and
benefits
Reduce to level needed
to retain hard-core
loyals
Sales
Promotion
Use heavy sales
promotion to entice
trial
Reduce to take
advantage of heavy
consumer demand
Increase to encourage
brand switching
Reduce to minimal
level

67. ν Product Mix (also called Product Assortment)- Set of all
products offered for sale by a particular company. A
product mix consists of various product lines.
ν Product Line- A group of products consist of all similar
items in one category. All products which are closely
related, having similar uses and similar physical
characteristics
¬ Number of items being offered by one product line is called
length of Product Line.
¬ The width of Product Mix refers to total number of product
lines offered by company.
¬ Length of Product Mix refers to total number of items in

68. ¬ The Depth of Product
Line refers to how many
variants( flavors, sizes,
colors etc.) are offered
of a product in the
product line .
¬ The Consistency of
Product Line refers to
how closely related the
various lines are in the
end use, production
requirement,
distribution channels or
some other way.

70. Product Mix of First Cry

71. Brands
Fabric &
Home care
Ariel
Tide
Fairy
Dash
Bonux
Lenor
MR Clean
Food &
Beverages
Nutristar
Sunny
Delight
Pringles
Crisco
Jif
Olean
Folgers
Health care
Actonel
Didronel
Metamucil
Peptobismol
Vicks
Crest
Blend-a-mend
PUR
Baby care
Pampers
Dodot
Luvs
Feminine
care
Always
Alldays
Tampax
Whisper
Beauty
care
Olay
Safeguard
Pantene
Pert Plus
Max Factor
Cover Girl
Camay
Zest
¬ marketing approximately 250 brands
¬ in over 130 countries.

72. Product Line Decisions
Line Stretching
When a company
lengthens its product line
beyond its current market
range (making additional
products for upper or
lower class users)
Line Filling
Adding more items
within a product
range to get more
profits, fill missing
items in product
line, utilize excess
capacity, try to be
leading as full line
company, to fill
holes to keep out
competitors
Downward
Upward
LLininee
PPrruunnini
ngg
Line Pruning
Dropping weak
Items from
product line
Two-way

73. Packaging
Χ Activity of designing and producing the container or wrapper for a
product.
ϖ 3 levels
I. Primary Packing- Contains core product
II. Secondary package- Contains primary packaging
III. Shipping Package- contains products in bulk quantity.

74. Other examples

75. Tetra Packs

76. •Protection against damage,
spoilage, tampering etc.
•Assistance in
marketing the product
•Provides Self
service opportunity
in stores

77. Labeling
ν Simple tag attached to the product or elaborately designed printed
information appearing on or with the package.
Performs several functions:
♦ Identifies product or brand
♦ Describes several things about the product
♦ Promotes the product through attractive graphics.
Features of Labeling
♥ Product & company name
♥ Features of Product
♥ Open dating- product manufacturing & expiry dates
♥ Unit pricing- simple or through UPC
♥ Grade labeling- quality level
♥ Ingredients

78. ¬ A bar code on a product’s package that provides
information read by optical scanners.
Χ
• UPC codes provide several advantages: labor saving, improve inventory cont
and help with marketing research.
• ¬ The Green Dot is the license symbol of a European network of industry-
funded systems for recycling the packaging materials of consumer goods
79400 80740

79. POLYTHENE TEREPHTHALATE (PET) is a
material widely used for packaging, especially
drinks containers. It is 90% recyclable
The CE marking
certifies that a
product has met
EU consumer
safety, health or
environmental
requirements.
CE stands for
Conformité
Européenne,
"European
conformity"
in French.

80. Promotes
Identifies
Competitive
Advantages
Describes
Sales
Tasks
Product
Safety
Packaging
Labeling

81. Brand/Trade Mark
♣ A name, term, sign, symbol, or design, or a combination of these,
intended to identify the goods or services of one seller or group of
sellers and to differentiate them from those competitors
¬ A Brand Name consists of words, letters, or numbers that can be
vocalized
¬ Brand Mark is a part of brand that appears in the form of a symbol ,
design or distinctive color or lettering.
θ A trademark is designated by the following symbols:
¬
¬
¬
™ (for an unregistered trademark, that is, a mark used to promote
or brand goods);
℠ (for an unregistered service mark, that is, a mark used to
promote or brand services); and
® (for a registered trademark).
http://www.ipo.gov.pk

82. ν Anyone who claims rights in a mark may use the
TM (trademark) or SM (service mark) designation
with the mark to alert the public to the claim. It is
not necessary to have a registration, or even a
pending application, to use these designations. The
claim may or may not be valid.
ν The registration symbol, ®, may only be used when
the mark is registered in the PTO. It is improper to
use the registration symbol at any point before the
registration issues.

83. ν Terms such as "mark", "brand" and "logo" are
sometimes used interchangeably with
"trademark". "Trademark", however, also
includes any device, brand, label, name,
signature, word, letter, numerical, shape of
goods, packaging, color or combination of
colors, smell, sound, movement or any
combination thereof which is capable of
distinguishing goods and services of one
business from those of others.

84. Desirable Qualities For A Brand Name
¬ Suggest something about the product’s benefits or
characteristics ( fair & Lovely, ufone, Compuclinic, Mr.
books, Cakes & Cookies, Telenor, Hijjab, Bugrer king,
Candyland)
¬ Easy to pronounce, recognize, and remember
¬ Capable of being registered and legally protected
¬ It should be distinctive
¬ It should not carry poor meanings in other
countries and languages
¬ Be adaptable to additions of product line or product
mix (McDonald vs. Burger King or Pizza Hut,
Alaska Airline vs. United Airlines)

86. Advantages of Branding
¬ Brand name makes it easy for sellers to process
orders & track down problem
¬ Branding gives seller opportunity to attract a loyal
and profitable customer.
¬ Branding provides legal protection to seller
¬ Helps in segmentation
¬ Strong brands help to build corporate image, makes
it easy to launch new brands & gain acceptance of
distributors and consumers easily

87. Designing and Managing Services

88. SERVICES
“Services are activities, benefits or satisfaction
which are offered for sale or provided in
connection with sale of goods”. - The American
Marketing Association
those separately
identifiable
“Services are
essentially intangibleactivities, which
provide
want satisfaction when marketed to consumers
and/or industrial uses and which are not
necessarily tied to the sale of a product or
another service”. - Stanton

90. COMPONENTS OF SERVICE
Physic
al
Produc
t

91. SERVICE
S

92. CHARACTERISTICS OF SERVICES
1. Intangibility
2.Inseparability
3. Heterogeneity (Individuality or
Variability)
4.Perishability

93. SERVICES DESIGN
A service involves creation and delivery of core
benefits in order to satisfy an identified need of
the customer. As a process, it refers as to how a
service is provided or delivered to a customer. In
a competitive market, the importance of the
actual process in service delivery has been
recognised.

94. Product
Design
Faciliti
e
s Design
Servic
e
Opera
ti ons
Proces
s
Design
Custo
m er
Servic
e
Proces
s
Design
Service
Encounter
Environme
nt
Provider
behaviour
Custome
r
Provider
interacti
on
Service
Requiremen
ts
Service
Performan
ce
Standards
Customer
Expectatio
ns
Customer
Experienc
e With
service
Service Design
Servic
e
Qualit

95. Factors Influence Designing Service Process
1. The Service Itself
2.Customer Participation in the
process
3. Location of Service Delivery
4.Level of Customer Contact
5. Degree of Standardisation
6.Complexity of the service

96. Customers are charged
just 15 rupees per
minute for the buffet,
which includes a
diverse range of
cuisine including
Italian, Indian and
Chinese.

97. Mgt model for Service Design / Stages / Process
Developin
g design
attributes
Specifying
design
performan
ce
standards
Generating
&
evaluating
design
concepts
Developing
design
details
Improving
performanc
e
Assessing
satisfactio
n
Measuring
performanc
e
Implementin
g
the design

98. BLUEPRINTING
A service blueprint is a flow chart of the service
process. It conveys the service concept by
showing all the elements or activities and their
sequencing and interaction. It is pictorial
description of the service system showing the
service at an overview level. It explains how each
job or department functions in relationship to
the service as a whole. Blueprinting was
developed by Shostak in 1987.

99. STAGES IN PREPARATION OF BLUEPRINTING
1. Put the service in the formof its
molecular structure
2. Divide the process into logical steps
3. Recognise the variability in the process
4. Identify the backstage actions in the process

100. Service Blueprint

101. Service Encounters
• Service encounters are transactional interactions in which
one person (service provider) provides a service or good
(e.g., a product, an appointment, airline tickets) to another
person.
• Every “Moment of Truth” is Important — according to
Scandinavian Airlines, each one of their 10 million
customers come in contact with 5 employees. Thus the
airlines say there 50 million moments of truth — each one
is managed well and “They prove they are the BEST”.

102. Types of Service Encounter
• Remote Encounter
• Phone Encounters
• Face-to-Face Encounters

105. Types of MOT

106. SERVQUAL Model

107. SBUs Characteristics
• Can be planned separately from the rest of the company
• Own set of competitors
• Manager responsible for strategic planning and profit performance

108. Establishing SBUs
• Product-Oriented versus Market-Oriented Definitions of a Business

109. Assessing resources to each SBU
• Now management should decide how to allocate
corporate resources to each SBU’s.
• BCG Matrix- relative market share

110. • It is a comparative analysis of business potential and the
evaluation of environment.
• According to this matrix, business could be classified as
high or low according to their industry growth rate and
relative market share.
• Relative Market Share = SBU Sales this year (/) leading
competitors sales this year.
Market Growth Rate = Industry sales this year - Industry
Sales last year.

112. • Stars- Stars represent business units having large market share in a fast
growing industry.
• They may generate cash but because of fast growing market, stars
require huge investments to maintain their lead. Net cash flow is
usually modest.
• SBU’s located in this cell are attractive as they are located in a robust
industry and these business units are highly competitive in the industry.
If successful, a star will become a cash cow when the industry matures.
• Cash Cows- Cash Cows represents business units having a large market
share in a mature, slow growing industry.
• Cash cows require little investment and generate cash that can be
utilized for investment in other business units.
• These SBU’s are the corporation’s key source of cash, and are
specifically the core business. T
• hey are the base of an organization. These businesses usually follow
stability strategies. When cash cows loose their appeal and move
towards deterioration, then a retrenchment policy may be pursued.

113. • Question Marks- Question marks represent business units
having low relative market share and located in a high
growth industry.
• They require huge amount of cash to maintain or gain
market share. They require attention to determine if the
venture can be viable.
• Question marks are generally new goods and services
which have a good commercial prospective.
• There is no specific strategy which can be adopted. If the
firm thinks it has dominant market share, then it can adopt
expansion strategy, else retrenchment strategy can be
adopted.
• Most businesses start as question marks as the company
tries to enter a high growth market in which there is
already a market-share. If ignored, then question marks
may become dogs, while if huge investment is made, then
they have potential of becoming stars.

114. • Dogs- Dogs represent businesses having weak market
shares in low-growth markets.
• They neither generate cash nor require huge amount of
cash. Due to low market share, these business units face
cost disadvantages.
• Generally retrenchment strategies are adopted because
these firms can gain market share only at the expense of
competitor’s/rival firms.
• These business firms have weak market share because of
high costs, poor quality, ineffective marketing, etc.
• Unless a dog has some other strategic aim, it should be
liquidated if there is fewer prospects for it to gain market
share.
• Number of dogs should be avoided and minimized in an
organization.

115. BCG MATRIX- COCA-COLA

117. ANSOFF’S MATRIX
•

118. • The four strategies of the Ansoff Matrix are:
• Market Penetration: It focuses on increasing sales of
existing products to an existing market.
• Product Development: It focuses on introducing new
products to an existing market.
• Market Development: It strategy focuses on entering a
new market using existing products.
• Diversification: It focuses on entering a new market with
the introduction of new products.

119. • In a market penetration strategy, the firm uses its
products in the existing market. In other words, a firm
is aiming to increase its market share with a market
penetration strategy.
• The market penetration strategy can be done in a
number of ways:
• Decreasing prices to attract existing or new customers
• Increasing promotion and distribution efforts
• Acquiring a competitor in the same marketplace
• For example, telecommunication companies all cater
to the same market and employ a market penetration
strategy by offering introductory prices and increasing
their promotion and distribution efforts.

120. • In a product development strategy, the firm develops a new
product to cater to the existing market. The move typically
involves extensive research and development and expansion of
the product range. The product strategy development strategy is
employed when firms have a strong understanding of their
current market and are able to provide innovative solutions to
meet the needs of the existing market.
• The product development strategy can be done in a number of
ways:
• Investing in R&D to develop new products to cater to the existing
market
• Acquiring a competitor’s product and merging resources to create
a new product that better meets the need of the existing market
• Strategic partnerships with other firms to gain access to each
partner’s distribution channels or brand
• For example, automotive companies are creating electric cars to
meet the changing needs of their existing market. Current market
consumers in the automobile market are becoming more
environmentally conscious.

121. • In a market development strategy, the firm enters a new market
with their existing product(s). In this context, expanding into new
markets may mean expanding into new geographies, customer
segments, regions, etc.
• The market development strategy is most successful if
(1) the firm owns proprietary technology that it can leverage into
new markets,
(2) consumers in the new market are profitable (i.e., they
possess disposable income), and
(3) consumer behaviour in the new markets does not deviate
too far from the existing markets.
• The market development strategy can be done in a number of
ways:
• Catering to a different customer segment
• Entering into a new domestic market (expanding regionally)
• Entering into a foreign market (expanding internationally)
• For example, sporting companies such as Nike and Adidas
recently entered the Chinese market for expansion. The two
firms are offering the same products to a new demographic.

122. • In a market development strategy, the firm enters a new market with
a new product. Although such a strategy is the riskiest as market and
product development is required, the risk can be mitigated through
related diversification.
• There are two types of diversification a firm can employ:
• 1. Related diversification: There are potential synergies to be realized
between the existing business and the new product/market.
• For example, a leather shoe producer that starts a line of leather
wallets or accessories is pursuing a related diversification strategy.
• 2. Unrelated diversification: There are no potential synergies to be
realized between the existing business and the new product/market.
• For example, a leather shoe producer that starts manufacturing
phones is pursuing an unrelated diversification strategy.
ADDITIONAL-READING:
https://themarketingagenda.com/2015/03/28/coca-cola-ansoff-matrix/

123. Assess growth opportunities